The government's such stance is based on a belief that its expanded fiscal spending will not have a big impact on the fiscal balance and sovereign debt as it has a healthy stream of tax revenue.

The fiscal deficit is expected to slightly grow to 1.8 percent of annual gross domestic product (GDP) next year from 1.6 percent expected for this year. Sovereign debt will reach 39.4 percent of GDP next year, compared with 38.6 percent set for this year.

Besides, the government forecasts revenue to rise by an average of 5.2 percent annually between 2018 and 2022. Actual total revenue for next year is expected to increase by 7.6 percent to 481.3 trillion won. (US$434 billion).

Being confident of its upbeat financial outlook, the government allocated most of its 471 trillion won budget to the welfare and innovative growth sectors to reaffirm its willingness to continue its income-led growth initiative.

"The out-of-date economic paradigm dragged down the economy and brought income polarization and unfair economy," President Moon Jae-in said.

"The administration's three leading economic policies, namely income-led growth, innovative growth and the fair economy initiative, should all move forward as a package," Moon said. "Income-led growth is aimed to make people's, not only wealthy people's, lives better. It's a way for sustainable growth."

According to the budget proposal, the record high of 162.2 trillion won (US$146.3 billion) was allocated to the welfare sector, up 12.1 percent from this year. It accounts for 34.5 percent of the total budget.

Critics argue that such a fiscal spending plan will be a burden on the national budget in the long term.

"A fiscal spending binge cannot help raising the growth rate in a short term, and it can even speed up the financial crisis in a long term," said Oh Jung-geun, chair of the Korea ICT Financial Convergence Association.